March 6, 2015 / 9:12 AM / 5 years ago

Cash-strapped Greece repays first part of IMF loan due in March

ATHENS (Reuters) - Greece repaid on Friday the first 310 million-euro instalment of a loan from the International Monetary Fund that falls due this month, as it scrambles to cover its funding needs.

Greek Prime Minister Alexis Tsipras (C) exits the Presidential Palace after attending a dinner hosted by outgoing Greek President Karolos Papoulias in honour of newly-elected President Prokopis Pavlopoulos, in Athens March 4, 2015. REUTERS/Alkis Konstantinidis

Prime Minister Alexis Tsipras’s newly elected government must pay a total of 1.5 billion euros to the IMF this month, but it is rapidly depleting its cash.

The payments fall due over two weeks starting on Friday. The next three instalments are due on March 13, 16 and 20.

“The payment of 310 million euros has been made, with a Friday value date,” a government official told Reuters, requesting anonymity.

The Tsipras government has said it will make the payments, but uncertainty has been growing over Greece’s cash position. It faces a decline in tax revenues, while aid from EU/IMF lenders remains on hold until Athens completes promised reforms.

Athens sent an updated list of reforms to Brussels on Friday, before a meeting of euro zone finance ministers on Monday, a Greek government official said. The list expanded on an earlier set of proposals, he said.

The reforms include measures to fight tax evasion and red tape and facilitate repayment of tax and pension fund arrears owed by millions of Greeks, the official said. It also proposes a “fiscal council” to generate savings for the state.

In the letter to the Eurogroup, Greek Finance Minister Yanis Varoufakis says Athens aims to save 200 million euros by cuts in public-sector spending, offseting an estimated 200 million-euro cost to tackle what it calls the country’s “humanitarian crisis.”

It also aims to collect 500 million euros in extra revenues annually from new gaming licences and taxing online gaming operators.

“The letter says that it is necessary to immediately commence discussions between Greece and its lenders, in order for the specific reforms to constitute a first batch of reforms ahead of the completion of an agreement in April,” the official said.

Athens is running out of options to fund itself despite striking a deal with the euro zone in February to extend its EU/IMF bailout by four months.

Greece needs about 4.5 billion euros a month, including a wage and pension bill of 1.5 billion euros. It is not due to receive any financial aid until it completes a review by lenders of final reforms required under its bailout.

Greece’s central bank chief, Yannis Stournaras, said after talks with Tsipras on Friday that Greek banks were sufficiently capitalised and faced no problem with deposit outflows.[ID:nL5N0W74R3]

“There is full support for Greek banks (from the ECB), there is absolutely no danger,” he said after the meeting. But he added Monday’s euro zone meeting had to be “successful”.

The ECB will resume normal lending to Greek banks only when it sees Athens is complying with its bailout programme and is on track to receive a favourable review, ECB President Mario Draghi said on Thursday. [ID:nL5N0W74PJ]

Athens has begun tapping cash held by pension funds and other entities to avoid running out of funds as early as this month. Various short-term options it has suggested to overcome the cash crunch have been blocked by euro zone lenders.

Tsipras’s Syriza party was elected on Jan. 25 on a promise to end the belt-tightening that came with the EU/IMF bailouts.

Additional reporting by Renee Maltezou; Editing by Larry King

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